EUR/USD net increase
The Euro Dollar is strongly accentuating his rising in the late european session on Wednesday, with a peak of 1.1675 for the moment.
Recall that the EUR/USD had posted a first phase of increase from the beginning of the european session, after a hollow on the 1.1518. The increase, however, was stopped before 1.1650, and the EUR/USD started a correction, even trying to drop below 1.16.
The movement of the bounce resumed so abruptly at the end of the afternoon, a movement that can be found on the Dollar with an acceleration to the downside on the Dollar Index which corresponds to the acceleration bullish on EUR/USD.
The movement also seems to be due to hopes for a resolution of the crisis in Italian politics, the Movement 5 Star has called for the nomination of Savona to be removed from the list of Ministers of the coalition government with the League. We should remember that it is the appointment of Savona, eurosceptic said, that had caused the veto of the President of italy last weekend, one of the main elements at the origin of the decline of the Euro this week.
The withdrawal of the candidature of Savona to the post of Minister of the Economy would validate a coalition government and avoid new elections (if, however, The League, the other coalition party, agrees that Savona is not the Minister of the Economy), which is positive for the Euro in the short term, even if it seems obvious that the markets will then rapidly have to worry about the policy that will be conducted by right-wing populists…
Note that this good performance of the Euro is also in part boosted by the rise in european stock markets today, with the CAC 40, which gained +0.5%, and the DAX, which increased by +0.6%.
We can also point about positive for the Euro from the German finance Minister, Olaf Scholz. It was felt that it is ” totally unreasonable to speculate against the Euro “. He also felt that Europe is better prepared to face challenges than ever before. About Italy, Scholz said it is firmly convinced that the majority of italians are pro-Europe.
From a graphical point of view, the profile is bearish short-term weakening, but it will take more than that to be able to talk of a bullish reversal.
The increase of this late afternoon was fast, and a correction could be just as much, especially if we take into account the important challenges that are approaching.
EUR/USD is currently testing its moving average 100 hours, but also have to face a line of downward trend visible in the hourly data and currently located at 1.1665. There is also resistance at 1.1675 and 1.17, a psychological threshold which is also moving average 200 hours.
The obstacles are so many in the short term, and only a clear breakout confirmed above 1.17 would consider a reversal of the uptrend sustainable.